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Let’s Get Ethical!

Katy Caine feeds back on some important findings after our annual Ethical Client Questionnaire.

You spoke and we listened!

Following the results of our annual pro-ethical screening survey, we noticed an increase in the number of you who are concerned about investing into Vaping stocks. In addition to this, you want to increase your support for social housing projects.

We decided to dig a little deeper on these issues and contacted seven ethical fund houses, we use within your portfolios, to ask two questions:

  1. Does your fund have any exposure to vaping stocks?
  2. Does your fund invest into stocks that support the social housing theme?

I am happy to say we had a 100% response rate to our emails. Transparency is very important in a world of ‘greenwashing’ and we work hard to ensure that none of the fund houses are making false, misleading or unsubstantiated claims about the positive social or environmental impact of their funds.

Vaping Stocks Analysis:

The replies were encouraging. None of the seven main fund houses, that make up the overwhelming percentage of our Pro-Ethical portfolios, hold vaping stocks. This is because they include this within their ‘tobacco products’ negative screening criteria.  Indeed, several of the fund houses were keen to explain that they also avoid ‘snuff’ products now being used by some footballers.

We were really pleased by these responses and hopefully this offers some positive news to our clients who were concerned that this type of product could ‘find its way around’ screening criteria.

Social Housing:

As housing charity ‘Shelter England’ puts it, social housing “gives social renters better rights, more control over their homes, and the chance to put down roots”. It is really heart-warming when we can make money together whilst also making a positive contribution to our society.

When addressing the subject of social housing we found that many of the main Ethical fund houses avoid riskier social housing projects from an ‘Equity Investment’ perspective.  In other words, many Equity funds don’t support Social Housing for the purpose of making gains or dividends – because of the investment risks.

However, where a fund holds exposure to fixed income (Bond funds) they will lend money to a social housing company. This is because the rental income comes from general purpose properties that are let at a discount to provide more affordable homes and secure tenancy to individuals and families.

It will also include more specialist rental accommodation for senior citizens or those with particular care requirements.  From a risk control perspective, the steady rental income offers something back for investors – even if it is under market rates.

We are looking forward to telling you more about a particular social housing holding in our next Quarterly review ‘Good News Story’.

The latest ‘Trends’ in the Ethical Investment Arena:

Every year, there seems to be some ‘trend’ from fund houses. Whether it is calling investments ‘ESG’ or ‘Sustainable’ or offering tracker funds that claim they are still responsible.  This year, we are noticing a few fund houses using what Darren calls the ‘Peanut Allergy’ approach.

We have observed a few funds now changing their screening policies from ‘Avoidance’ to ‘not investing more than 5%’.  Whilst we can really understand the reasoning behind this, we have been actively engaging with these fund houses to better understand if something has radically altered.

So far, we are finding that these funds do still seek to fully ‘Avoid’ certain assets such as Tobacco, Gambling, Oil etc. However, they are putting in the disclaimer about allowing > 5% investment to allow them some ‘wriggle room’ if a certain stock did suddenly show links to negative screening areas.

We have sought assurances from these fund houses that they do not actively hold the ‘red lines’ our clients would be cross about supporting. However, we only mention it because our own disclaimers will now also have to change to ensure we marry up to the reality of the way fund managers are currently operating.


We take our Pro-Ethical Portfolios very seriously – because we know that it matters to our clients. I do believe that the Portfolios are really doing some great things whilst trying extremely hard to acknowledge our clients’ collective ‘red lines’ and to avoid them.

As ever, if you have any questions at all, please speak to myself or Darren. We are extremely proud to be here for you 100%.



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